Accounts Only Mode in Tally

Prerequisites: Module 8 — Predefined Groups

Learning Objectives

By the end of this module, you will be able to:

• Explain what Accounts Only mode is and when to use it
• Record the opening balance entry in Tally
• Use Payment Voucher (F5) and Receipt Voucher (F6) correctly
• Understand which voucher type to use for which transaction

What Is Accounts Only Mode?

Tally Prime can run in two modes:

1. Accounts with Inventory — Full mode; tracks stock items, quantities, godowns
2. Accounts Only — Financial accounting only; no stock tracking by item/quantity

In Accounts Only mode, purchases and sales are recorded at total value — without specifying "how many phones at what price." Stock is managed manually or via a Stock-in-Hand ledger rather than individual item tracking.

When to Use Accounts Only Mode

For Sunrise Retail (electronics trader with GST and stock tracking), Accounts with Inventory is the long-term choice. But understanding Accounts Only mode is essential — many businesses use it, and it helps you understand the pure accounting layer without inventory complexity.

Enabling Accounts Only Mode

Gateway of Tally → F11 (Company Features) → Accounting Features
→ Maintain Accounts Only: Yes
→ Maintain Stock Items: No

Voucher Types in Accounts Only Mode

In Accounts Only mode, the following vouchers are available:

The key rule: If cash or bank is involved, use Payment/Receipt/Contra. If it's a pure non-cash entry, use Journal.

Sunrise Retail — Case Study Application

Sunrise Retail Pvt Ltd — First Week Entries (Accounts Only Mode)

Entry 1: Opening Balances (April 1, 2025)

Opening balances are entered via a Journal Voucher or directly in the ledger master during setup. The cleanest approach for a new company is to enter balances directly in each ledger's "Opening Balance" field.

But for learning purposes, here is the journal entry that represents the entire opening balance sheet (₹18,80,000 each side):

Journal Voucher (F7) — April 1, 2025:

In Tally:

Gateway of Tally → Accounting Vouchers → F7 (Journal)
Date: 01-Apr-2025
Narration: Opening balances as per Balance Sheet — 1 April 2025

Entry 2: Rent Payment (April 8, 2025)

Rent ₹30,000 + CGST ₹2,700 + SGST ₹2,700 = ₹35,400 paid by cheque.

Payment Voucher (F5):

Gateway of Tally → Accounting Vouchers → F5 (Payment)
Date: 08-Apr-2025

Narration: Office rent for April 2025 paid by cheque No. XXXXXX

Why Payment Voucher? Money is leaving the business (from bank) — any outflow uses Payment Voucher.

Important: In Payment Voucher, the source account (Bank/Cash) is the credit side. The expense accounts are the debit side. This feels backwards at first — but remember, you're crediting the bank because money is going out of the bank (bank's balance reduces).

Entry 3: Recording Advance from Tech Park (April 28, 2025)

Tech Park Retail Store pays ₹1,00,000 advance for phones to be delivered in May.

Receipt Voucher (F6):

Gateway of Tally → Accounting Vouchers → F6 (Receipt)
Date: 28-Apr-2025

Narration: Advance received from Tech Park Retail Store for May delivery — NEFT

Note: Tech Park's ledger will show a credit balance (we owe them goods). This is correct — it represents a liability (advance received).

Balance Sheet After First Week — Accounts Only

After these entries, the Tally Balance Sheet (Gateway of Tally → Reports → Balance Sheet) shows:

Liabilities Side:

• Capital: ₹17,00,000
• TechWorld Distributors: ₹1,80,000
• Tech Park Advance: ₹1,00,000 (new — from advance receipt)
• Rent Payable: (nil — paid on Apr 8)

Assets Side:

• Cash: ₹50,000
• SBI Bank: ₹8,00,000 − ₹35,400 + ₹1,00,000 = ₹8,64,600
• Opening Stock: ₹6,00,000
• Furniture: ₹1,50,000
• Computer: ₹80,000
• Security Deposit: ₹2,00,000
• CGST Input: ₹2,700
• SGST Input: ₹2,700
• Total: ₹19,52,000

How Tally Vouchers Work — Important Notes

Single Mode vs Double Mode

Tally vouchers have two display modes:

• Single Entry Mode: Simple — one Dr/Cr at top, multiple lines below
• Double Entry Mode: Shows full Dr and Cr columns like a journal

Press Ctrl+H to toggle between modes. For complex entries (multiple Dr/Cr lines), Double Entry mode is easier.

Altering Vouchers

Made a mistake? In Tally, you don't erase — you alter:

Gateway → Day Book → Select the entry → Press Enter → Edit → Ctrl+A to save

Or to cancel entirely: Select the entry → Alt+D (Delete).

Narration

Always add a narration to every voucher — it is your audit trail. A well-written narration (cheque number, party name, purpose) saves hours of investigation later.

Practice Exercise

Exercise 1: Record these transactions in Accounts Only mode for Sunrise Retail. State the voucher type (F4/F5/F6/F7), the accounts, and the amounts:

1. April 2: Kiran Sharma deposits ₹2,00,000 personal cash into SBI bank account as additional capital
2. April 15: Electricity bill ₹8,500 paid in cash
3. April 18: Received ₹5,66,400 from Digital Hub Retail via NEFT into SBI

Exercise 2: Why would a pure service business (like a CA firm) prefer Accounts Only mode over Accounts with Inventory? Give two practical reasons.

Key Terms

Module Summary

• Accounts Only mode is for businesses that don't need item-wise stock tracking
• Three key vouchers: Payment (F5) for outflows, Receipt (F6) for inflows, Journal (F7) for non-cash
• Opening balances can be entered directly in ledger masters or via a Journal Voucher on Day 1
• In Payment Voucher: the source (Bank/Cash) is credited, expense accounts are debited — money leaves the bank
• In Receipt Voucher: the destination (Bank/Cash) is debited, the source party is credited — money enters the bank
• Always write a meaningful narration — it becomes your audit trail

Quick Quiz

Test yourself before moving on:

1. Sunrise Retail pays the electricity bill via cash. Which voucher type is used?

• a) Journal (F7)
• b) Receipt (F6)
• c) Payment (F5)
• d) Contra (F4)

2. In a Payment Voucher in Tally, the bank/cash account from which payment is made is placed on the:

• a) Debit side
• b) Credit side
• c) Either side
• d) Not shown in payment vouchers

3. A service firm with no physical products should use:

• a) Accounts with Inventory — to track billable hours as "items"
• b) Accounts Only
• c) Manufacturing accounts
• d) Both modes simultaneously

4. In Tally, you made an error in a payment voucher. The correct way to fix it is:

• a) Delete the company and start fresh
• b) Create a reverse entry manually
• c) Open the voucher from Day Book and alter it
• d) Ignore it — Tally auto-corrects errors

Next: Module 10 — Contra Entry — The one voucher type that's unique to internal transfers: cash-to-bank and bank-to-cash movements explained in full.